We argued in Lack of US market & macro volatility both reassuring and troubling (17 January) that “the market’s willingness to look through domestic political and geopolitical events suggests that only a significant exogenous or endogenous shock currently beyond markets’ radar screens (an “unknown unknown”) is likely to really move the needle”. That unknown unknown, a “black swan” event, has
Read moreDeveloped central banks in the past week have been falling over themselves to loosen monetary policy and secure the proper functioning of financial and credit markets. The Fed, RBNZ, Bank of Canada, Bank of England and Norges Bank have delivered inter-meeting policy rate cuts of between 50bp and 100bp and our measure of the developed central bank policy rate has
Read moreThe drastic measures which governments across the world have taken so far to mitigate the spread of the coronavirus have few precedents outside of war times and therefore quantifying their economic, financial and social impact remains challenging. However, there is little doubt that economic activity in China, the epicentre of the epidemic, has slowed sharply. Disruptions and delays to international
Read moreIn reaction to the coronavirus epidemic governments across the world have enacted measures unprecedented in recent decades, including closing national borders, setting up quarantine zones, restricting travel and closing factories and schools. Economic activity in China has slowed sharply and disruptions to international supply chains are impacting global trade and production with the slump in tourism heaping further pressure on
Read moreThe pace of central bank policy rate cuts has slowed sharply in the past few months (see Figure 1), in line with our view (see Early Christmas for (still weak) global growth, 11th December 2019). While the emerging market central bank policy rate has fallen a further 20bp since late-October to a multi-decade low of just 4.55%, the developed economy
Read moreNote that I will be speaking on the currency panel at the 5th Global Independent Research Conference on 3rd February in London (1 Wimpole Street). We will be discussing the outlook for i) Asian and EM currencies, including the Renminbi, ii) developed market currencies, including the Euro and Sterling, iii) depressed global FX volatility, iv) central bank monetary policy and
Read moreNote that I will be speaking on the currency panel at the 5th Global Independent Research Conference on 3rd February in London (1 Wimpole Street). Independent research providers will be debating their views on a range of investment topics through panel discussions. This conference is for the buy-side community including Portfolio Managers, Chief Investment Officers, Fund Managers, Strategists, Analysts and
Read moreNote that I will be speaking on the currency panel at the 5th Global Independent Research Conference on 3rd February in London (1 Wimpole Street). Independent research providers will be debating their views on a range of investment topics through panel discussions. This conference is for the buy-side community including Portfolio Managers, Chief Investment Officers, Fund Managers, Strategists, Analysts and
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Read moreFinancial-market post-mortems for 2019 are out and the bottom line is that the trade was to be long pretty much everything – including US and global equities, bonds and commodities (bar natural gas) – but short equity and FX volatility. Trading FX last year was indeed an exercise in both patience and timing with depressed currency volatility going hand-in-hand with
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